The U.S. experienced in May its largest drop in crude oil production since at least January 1980, according to the U.S. Energy Information Administration (EIA).
Production dropped by 1.99 million barrels per day (MMbbl/d), or 16.6%, in May compared to April, EIA data show. Producers slowed drilling activity and curtailed production as the coronavirus pandemic slowed demand.Texas, home of major oil-producing regions that include the Permian Basin and Eagle Ford Shale, saw the biggest drop. Production here fell by 14.8%, or 764,000 bbl/d.
North Dakota followed with a 353,000 bbl/d decrease, or 29.1%.
Lower production came as the benchmark WTI crude oil spot price recovered from an average $17/bbl in April to $29/bbl in May and demand improver, the EIA said.
Continued recovery in demand and prices are expected in July. The agency forecast U.S. crude oil production will average 11.6 MMbbl/d in 2020, down from pre-COVID 12.8 MMbbl/d average for January and February.
EIA data show U.S. gas production saw its second-largest monthly decrease on record. Production decreased 5.9 billion cubic feet per day, or 5.3%, from April to May. Texas, again, had the biggest monthly drop, falling by 2.3 Bcf/d, or 8.1%.
“EIA forecasts that U.S. marketed natural gas production—which it defines as gross withdrawals of natural gas less natural gas used for repressuring reservoirs, quantities vented or flared, and nonhydrocarbon gases removed in treating or processing operations—will continue to decline for the remainder of 2020,” the EIA said.
In early July, two U.S. energy groups gave up their six-year battle to build a natural gas pipeline, despite fighting all the way to the U.S. Supreme Court to obtain a permit.
Vessel-tracking and port data compiled by Refinitiv indicates China will import 867,300 bbl/d of U.S. crude oil in September, exceeding 653,870 bbl/d in August and 693,500 bbl/d in July.
OPEC member Libya is exempt from cutting oil output under a deal by OPEC and allies, known as OPEC+. A restart in Libya supply could force other producers to make further reductions to support prices.